Climate change: the biggest threat to economic recovery

Angel Gurría, Secretary-General of the OECD, and James P. Leape, Director General of WWF International

After a year of pain and pessimism, we are starting to see signs of an economic recovery. Green shoots are sprouting. Governments' bold economic and financial actions of over the past year are beginning to take effect.

But we are not out of the woods yet. We now need to make sure that recovery is sustained, and for that bold action on climate change will be needed. As world leaders prepare for the UN climate change talks in Copenhagen this December, one of their top priorities must be to move their economies towards a low-carbon future.

Business as usual is not an option if the economic recovery is to be sustained. If we carry on increasing greenhouse gas emissions, the resulting climate change will lead to massive upheavals: floods and droughts, more violent storms, more intense heat waves, escalating conflicts over food and water and resources. Shocking signs are already visible of what may lie in store.

The Arctic ice-cap is melting, posing threats that were almost inconceivable a few years ago. Less ice means more sea water. A threatened rise in global sea levels could flood many coastal cities worldwide and expose 150 million people to coastal flooding risks by 2070. As the permafrost thaws, the release into the atmosphere of huge stores of frozen methane and carbon dioxide would accelerate global warming even more.

Faced with such risks, we need to act now to prevent worst-case scenarios from becoming reality. According to analysis from the OECD, IPCC, McKinsey and others, serious climate action will cost only a fraction of a percentage point of annual growth in world GDP. Doing nothing, by contrast, as the Stern Review on the Economics of Climate Change has warned us, could lead to radically larger losses.

Starting today, we need to change our lifestyles and our attitudes. We need to produce, transport, consume, regulate, govern and think differently. We need to go green. Some stimulus packages adopted by governments this year included investments in green infrastructure and jobs. That was a good start, but a deeper structural shift is needed.

The financial and economic crisis from which we are emerging provides a unique opportunity to achieve that. Last month's G20 agreement to eliminate fossil fuel subsidies by 2020 was a positive move - according to OECD analysis, removing fossil fuel subsidies in some of the developing countries alone could reduce global GHG emissions by 10% in 2050, while also increasing economic efficiency. But in addition, we must channel investment into clean-energy technologies, buildings and transport infrastructures that can be the foundation of a low-carbon economy.

In doing so, we will create huge opportunities in the form of new industries and new jobs, helping to offset recent job losses in other sectors. In China alone, the renewable energy sector already generates output worth US$ 17 billion and employs one million workers. That's only a small part of what could lie in store. The potential for "green technologies" in such areas as energy, water, buildings, transportation and industry is huge.

Between now and Copenhagen, we should stay focused on climate change and address a series of major sticking points in current international negotiations.

To keep a good chance of limiting the rise in global temperatures to 2 degrees Celsius above pre-industrial levels, global emissions of greenhouse gases must peak within the next 10 to 15 years and then start to decline. For that to be possible, every nation must play its part.

To start with, advanced economies must agree to make sharp cuts in their own greenhouse gas emissions while at the same time providing robust financing to support mitigation and adaptation in developing countries. But emerging economies must also contribute. In return for financing commitments from advanced economies, they must pledge to take appropriately ambitious action to counter the negative effects of increased energy use and deforestation.

One of the principal challenges will be to agree on concrete proposals for the financing mechanisms that will make global climate action possible. We need to pave the way for a flow of investment and finance from OECD countries to developing countries.

In 2007, bilateral Official Development Assistance (ODA) flows for low-carbon investments in developing countries were about US$ 4.3 billion, with multilateral financing contributing a similar amount. This will need to increase sharply and be complemented by private sector financing over the long-term.

Urgent action is needed. Climate change is the greatest challenge that humanity has ever faced collectively. We must respond to it now, for our own sake and for the sake of our children and grandchildren. We can make going green compatible with increased prosperity. Copenhagen must mark a turning point in our efforts.

Twitter feed

Suscribe now

Don't miss

Food production will suffer some of the most immediate and brutal effects of climate change, with some regions of the world suffering far more than others. Only through unhindered global trade can we ensure that high-quality, nutritious food reaches those who need it most, Angel Gurría, Secretary-General of the OECD, and José Graziano da Silva, Director-General of the United Nations Food and Agriculture Organization, write in their latest Project Syndicate article. Read the article here.

Globalisation will continue and get stronger, and how to harness it is the great challenge, says OECD Secretary-General Gurría on Bloomberg TV. Watch the interview here.

OECD Secretary-General Angel Gurría with UN Secretary-General António Guterres at the 73rd Session of the UN General Assembly, in New York City.

The new OECD Observer Crossword, with Myles Mellor. Try it online!

Watch the webcast of the final press conference of the OECD annual ministerial meeting 2018.

Listen to the "Robots are coming for our jobs" episode of The Guardian's "Chips with Everything podcast", in which The Guardian’s economics editor, Larry Elliott, and Jeremy Wyatt, a professor of robotics and artificial intelligence at the University of Birmingham, and Jordan Erica Webber, freelance journalist, discuss the findings of the new OECD report "Automation, skills use and training". Listen here.

Do we really know the difference between right and wrong? Alison Taylor of BSR and Susan Hawley of Corruption Watch tell us why it matters to play by the rules. Watch the recording of our Facebook live interview here.

Has public decision-making been hijacked by a privileged few? Watch the recording of our Facebook live interview with Stav Shaffir, MK (Zionist Union) Chair of the Knesset Committee on Transparency here.

Can a nudge help us make more ethical decisions? Watch the recording of our Facebook live interview with Saugatto Datta, managing director at ideas42 here.

The fight against tax evasion is gaining further momentum as Barbados, Côte d’Ivoire, Jamaica, Malaysia, Panama and Tunisia signed the BEPS Multilateral Convention on 24 January, bringing the total number of signatories to 78. The Convention strengthens existing tax treaties and reduces opportunities for tax avoidance by multinational enterprises.

Do you trust your government? The OECD’s How's life 2017 report finds that only 38% of people in OECD countries trust their government. How can we improve our old "Social contract?" Read more.

Globalisation’s many benefits have been unequally shared, and public policy has struggled to keep up with a rapidly-shifting world. The OECD is working alongside governments and international organisations to help improve and harness the gains while tackling the root causes of inequality, and ensuring a level playing field globally. Please watch.

Checking out the job situation with the OECD scoreboard of labour market performances:
do you want to know how your country compares with neighbours and competitors on income levels or employment?

Trade is an important point of focus in today’s international economy. This video presents facts and statistics from OECD’s most recent publications on this topic.

The OECD Gender Initiative examines existing barriers to gender equality in education, employment, and entrepreneurship. The gender portal monitors the progress made by governments to promote gender equality in both OECD and non-OECD countries and provides good practices based on analytical tools and reliable data.

Interested in a career in Paris at the OECD? The OECD is a major international organisation, with a mission to build better policies for better lives. With our hub based in one of the world's global cities and offices across continents, find out more at www.oecd.org/careers .